Germany’s Union Investment has threatened to stop launching mutual funds for German small investors if the planned transaction tax by the EU disadvantages retail savers.

In one of the most outspoken criticisms of the tax, the German asset manager said the tax was a “spectacular violation against the equal treatment of small savers”.

Union estimates its own mutual fund clients, with about €37bn, could be disadvantaged to the tune of 0.4% per annum, or €1.5bn over 10 years, as a result of the tax.

“This money belongs wholly and only to German small savers, who are not responsible for the financial crisis. This tax has nothing to do with ‘justice'”, said Joachim Reinke (pictured), head of the German asset manager.

He said it could not be reconciled that the German State gives its citizens tax advantages for saving in so-called Riester pension plans on the one hand, “and then with the other hand quietly takes a portion away from them”.

EU politicians have backed the tax on financial transactions within the EU, though leaders in Great Britain and Luxembourg – home to two of the region’s largest financial centres – notably have not.

Reinke warned: “If financial centres like London, Luxembourg or Ireland do not introduce the tax, the goal will be missed to make those who caused the crisis pay some of the cost for it.”

He added those groups that could move their operations to centres outside the tax would simply do so, and “it cannot be that a small saver with the German fund is hit harder by the tax than someone with the same product in Luxembourg.”

Union is not alone in opposing the tax.

The German fund trade body, Bundesverband Investment und Asset Management Deutschlands, is also vehemently against it.

BVI CEO Thomas Richter said: “This tax will be paid foremost by investors, and not by those who caused the crisis.”

He said it was wrong to claim the tax was justified because it would limit high frequency trading – one of the practices long in the cross-hairs of European regulators.

“People who want to [limit the practice] can achieve the same end by implementing minimum holding periods for orders, or penalties for failed orders. One does not need a tax with large collateral damage.”